Forest clearance issue to be taken to Cabinet

Forest clearance issue to be taken to Cabinet

Investment Board Nepal (IBN) and the Foreign Ministry have planned to take up the issue of forest clearance with the Cabinet as delays have spread concern among the Indian developers of two key hydropower projects.

The two government agencies agreed to pursue the matter after the developers of the 900 MW Upper Karnali and 900 MW Arun 3 schemes complained about the recently issued forest clearance guidelines at the meeting of the Nepal-India Oversight Mechanism held on Thursday in Kathmandu.

During the meeting co-chaired by Foreign Secretary Shanker Das Bairagi, the Indian developers criticized the stringent guidelines on forest land acquisition that requires the developer to provide compensation for the whole area affected by the project.

“This provision will significantly increase the cost of acquisition of forest land, making projects less attractive to developers,” said one of the developers.

“Most importantly, this provision in the guidelines conflicts with the provision mentioned in the project development agreement (PDA) that we have signed with IBN. It requires us to pay compensation only for the land where permanent structures like powerhouse and dam are built.” According to the PDA, developers only had to pay a lease fee for the rest of the land affected by the project. Similarly, developers are required to plant 25 trees for every tree that is cut down for the construction of the project. They also have to nurture the saplings for a period of five years, according to the guidelines.

However, before the introduction of the guidelines, there was a verbal agreement that developers needed to plant only twice the number of trees that are cut down. “This provision will create additional problems and significantly raise the cost of forest land acquisition,” said the developer.

IBN has signed the PDAs with the Indian developers as the Nepal government has authorized it to act as the project implementing agency. It has conceded that the provision inserted in the guidelines issued by the Forest Ministry conflicts with the PDA signed with the developer. “The guidelines issued by the Forest Ministry will give a negative impression of Nepal to potential foreign investors,” said an IBN source. “They will think of Nepal as a country which does not honour agreements signed with foreign investors. This will affect our plan to attract foreign direct investment to develop infrastructure in the country.”

However, the Forest Ministry is adamant about sticking to the guidelines. Ministry officials present at the meeting said they issued the guidelines to protect the country’s environment and forest resources. In a bid to find an amicable solution, IBN plans to take a proposal to the Cabinet where the two Indian developers will be allowed to acquire forest land as per the provision mentioned in the PDA. “Our proposal is to request the Cabinet to make a special arrangement for the Arun and Upper Karnali projects by referring to provisions in the PDA,” said the IBN source. “This is the only amicable solution to the existing problem.”